Stocks continued to rally on Thursday after the initial jobless claims were better than expected. Three of the four indices moved higher on the day and that stretched the S&P’s winning streak to five days and the Nasdaq’s streak has reached seven days.
The Nasdaq led the way yesterday with a gain of 1.0% and it was followed by the Dow with a gain of 0.68%. The S&P moved up 0.64% and the Russell was the lone one to finish in the red with a loss of 0.10%.
The sectors were evenly split on the day with five moving higher and five moving lower. Communication services stocks led the way and the sector gained 2.63% on the day. The tech sector jumped 1.41% and it was the only other sector to gain over 1.0%.
On the down side, the energy sector was the worst performer with a loss of 0.80% while the healthcare sector fell 0.53% for the second worst loss.My scans flipped back to the negative side last night after two positive readings. There were 39 bearish signals and 15 bullish signals.
After coming close to entering positive territory for the first time since July 16, the barometer dipped back down last night.
The final reading was -7.6, down from -1.2 the night before.
After three straight bullish trade ideas and not finding any bearish trade setups that I liked over the last few nights, I found a bearish trade idea. The stock is EQT Corp. (NYSE: EQT) and the company has very poor fundamental ratings. The EPS rating is terrible at 8 and the SMR rating is an E.
There were two different items that stood out to me on the chart. We see the high back in April and the similar style to the candlestick. The high that day was $17.16 and the high yesterday was $17.15 with same long, upper tail style to the chart. Secondly, we see the RSI and stochastics were both in overbought territory for the first time since June 8. That date marked the top before the stock fell almost 38%.
Buy to open the September 18-strike puts on EQT at $2.60 or better. These options expire on September 18. I suggest a target gain of 100% for this trade and that means the stock will need to drop to $12.80. Based on the instances listed above I think that is a reasonable target. I suggest a stop at $17.50.
— Rick Pendergraft
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